Wednesday, March 4, 2015

Between Insas, Keuro and TA

For those who follow or you can check out here, I do own all the three stocks - Insas, Keuro and TA Enterprise. There is one question recently, on which one does a person choose and did I buy TA and Insas because of its relative low Price/NA.

I guess if anyone choose either of these stocks or any other, it depends on ones understanding or appetite. (I do not recommend you to buy, but in many of my cases, there is a reason I buy these stocks and I usually put them down in this blog.)

Perhaps, one does not really understand why I buy many of the stocks that I picked. All three stocks have a strong margin of safety in my mind. (Have not been using this word, but perhaps the best way to describe is Graham's Margin of Safety)

Keuro - Rimbayu project I deemed to be almost valuable as in the price I paid for the entire stock, Rimbayu's value alone I see it as equivalent to Keuro which I paid for. Remember I said, WCE is a bonus and if it is successful, it is a huge bonus - enormous. I visited many times Rimbayu before I decided to buy Keuro? And yet the main jewel is not Rimbayu yet. I do not have the opportunity to visit WCE.

Insas - same thing Inari has strong value and in itself it is worth around the price I paid for Insas. And Insas has many other businesses. It has recently been purchasing, Ho Hup - I see a good angle for it to do so. And in my blog I mentioned I talked to people in Inari, and they may not know the reason for me talking to them. I also talked to people (companies) who gives projects to Inari.

TA - The foreign properties acts as a strong hedge and they could be undervalued to the books.

However, one most important trait is that they must have good growth, or if not, strong in the future. Things I can see that will make the company valuable looking forward. No point buying a business like telco (Maxis, Digi or worse still Green Packet) when I can't see growth in the future. Telco used to be a darling stock 10 - 15 years ago. Not anymore, today. (Probably only, the one telco which I see value moving forward is TimeCom. Surprise?)

In each of the stocks I picked there are something which I see valuable.

Rimbayu, WCE - good strong projects especially WCE when it is completed.

Inari - a strong business with -remember I mentioned management. But I wanted a margin of safety, which I could not get directly from Inari. Insas, as I see it today seems to be different from Insas 10 years ago. Today's Insas has a sense of direction, which is probably why they are raising funds. Insas 10 years ago, was a careful investor - no doubt good but lacked action.

TA - well, much more defensive, but they know what they are doing and they buy good properties in good locations. Basically you can see that TA is buying for the future value. Which is also why you do not see me buying a lot. It is a strong hedging stock, with decent dividends. This company listed in Bursa is quite unique as probably I cannot find a similar one (unless you buy TA Global), much more asset hedged and top up with it, is undervalued. I would say, if one is to buy gold or silver for that matter, I like TA better.

I like businesses where they go out and work for their value. Strong differentiation and value. You do not see that in both Insas and TA - but others like DKSH, Airport, NTPM, Padini (to some extent) have that.

Well, one can say I am also boring - balik-balik same stocks. There is one place where you can get daily tips and I strongly recommend, the Edgemarkets.

15 comments:

Thank you for your reply! Its just that I feel uncomfortable looking at the cash flow statement of these companies, for me, the most important criteria is the cash generating capabilities for a company. Something like Jobstreet, but that's gone now.

Looking at its RNAV and also its new majority shareholders - SMRT and Creador, it seems that this share provides excellent upside with current share price of RM0.6 being underpinned by the value of its properties.

Do not see much impact from that unless one trades daily or frequently.

I think the bigger concern is what is the impact to many of the companies that one invested into.

In the short run, I do see consumption to be reduced although the impact will be for short term.

The bigger concern is the sectors that do exports and have large local material input costs. The 6% is additional costs although it may not be direct 6%.

E.g. Rubber gloves companies will be affected - but I do see them passing the costs to buyers. Palm companies will be facing more challenges to pass the costs as they are in significant competition against Indonesia.

Companies that have low margins will be affected more than the ones that have huge margins - but it also depends on whether they can pass the costs to consumers.

All in all though, I still think GST is good for the country despite all the grunts and unhappiness.

I noticed TA has amended its NTA from 1.78 (Dec report) to 1.06 (Feb report) recently. Do you have any ideas on why is it so? I did not notice any sales of assets or big chunk of cash out flow. Was it due to some kind of new accounting standards?

I found a stock which is quite good, which is V.S industry. Low P/E, improving balance sheet. Cash flow is always good although seldom create free cash flow. somehow, the latest half year result changed the trend. They are generating huge pile of free cash flow. Future prospect looks bright and a lot more but just to mention a few. How do you think on this stock?

VS Industry is a stock in the cyclical space - EMS i.e. electronics. Currently, due to several factors, currency and oil price included (better consumption power for developed countries), it is bound to do well. See many others Vitrox, Inari. while I foresee that they will continue to do well, it will come a time when the cyclical trend will be down. Its share price has been up for a while. The worry for this kind of stock is whether are you catching it at its height. In any case, it is a decently solid company but will need to continue to reinvest, hence the not so strong free cashflow.

V.S industry have multiple proposals like new esos scheme and private placement up to 10%. I understand that the increase of shares will dilute the ownership of existing shareholders. The main purpose for the fund raising is to cater for working capital and thus change the company financial conditions(of which i deem it as good enough since the net gearing ratio improved from 40% to 20% currently). What do you think of this corporate exercise? lastly, thanks for your value comment and appreciate a lot. best regards

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The content here should serve as the opinion of the writer rather than as an advice to buy or sell. You should do your own research and/or seek expert's advice when doing your investments. Any decision that you made is your own and the author should not be held accountable.